Lear Corp., a leading global supplier of automotive seating and electrical systems, has reported record sales and earnings for the first quarter 2017.
Sales in the first quarter increased 7 percent to $5 billion. Excluding the impact of foreign exchange, sales were up 9 percent, with growth in all regions. Lear says the increase reflects the addition of new business and increased production volumes on key platforms in both of its product segments. Sales for both segments were up 7 percent. Excluding the impact of foreign exchange, sales for Lear’s Seating and E-Systems segments were up 9 percent and 8 percent, respectively.
Core operating earnings were $431.5 million, or 8.6 percent of sales, reflecting the increase in sales and favorable operating performance. In the Seating segment, margins and adjusted margins increased 20 basis points to 8.3 percent and 8.5 percent of sales, respectively. In the E-Systems segment, margins increased 50 basis points and adjusted margins increased 40 basis points to 14.6 percent and 14.9 percent of sales, respectively.
Earnings per share were up 32 percent to $4.35 per share and include a tax benefit related to a change in the accounting for share-based compensation. Adjusted earnings per share were up 26 percent to $4.27 per share, reflecting the improved operating earnings, a reduced share count and a lower effective tax rate.
In the first quarter of 2017, net cash provided by operating activities was $278.9 million, and free cash flow was $158.1 million.
“Our industry-leading cost structure and product capabilities are driving outstanding financial results and market share gains in both product segments,” said Matt Simoncini, Lear’s president and CEO. “We have a record sales backlog that will provide continued profitable sales growth and superior shareholder returns. This year, we celebrate our 100th anniversary, and the company has never been in a stronger competitive position. I have never been more optimistic about our future.”
Full Year 2017 Financial Outlook
Lear’s 2017 financial outlook is unchanged from the prior outlook. The current outlook is based on industry vehicle production assumptions of 17.6 million units in North America, down 1 percent from the prior year, 22.8 million units in Europe and Africa, up 2 percent from the prior year, and 26.3 million units in China, up 2 percent from the prior year. Lear’s financial outlook is based on an average full year exchange rate of $1.05/Euro.
Sales in 2017 are expected to be approximately $19.5 billion, and core operating earnings are expected to be about $1.6 billion. Net cash provided by operating activities is estimated to be $1.6 billion, and capital spending is expected to be $550 million, resulting in free cash flow in excess of $1 billion.
